NatWest Three prepare for a long trip to Houston

Natwest three5.jpgThe downtown Federal Detention Facility is not normally the destination of choice for U.K. bankers traveling to Houston, but it is looking increasingly as if that’s where three former U.K. bankers embroiled in a transaction devised by former Enron CFO Andy Fastow will be spending a considerable amount of time in the near future.
As this Forbes article reports, former NatWest bankers David Bermingham, Giles Darby and Gary Mulgrew lost their High Court appeal to avoid extradition to Houston to face charges that they bilked their former employer of $7.3 million in one of the schemes allegedly engineered by former Enron CFO Andrew Fastow and his right hand man, Michael Kopper (previous posts are here). After the High Court’s decision was announced, the three ex-bankers said that they intend to appeal to the House of Lords, the U.K.’s highest court.
The case is particularly interesting because NatWest — the institution that the Enron Task Force contends was bilked by the three former bankers — never sought to recover the allegedly bilked funds from the three men, never pursued criminal charges against them in England, and neither the Crown Prosecution Service, the Financial Services Authority nor the Serious Fraud Office in the UK found sufficient evidence to prosecute. Had a trial taken place in the U.K., the three men could not be extradited to the U.S. because of the principle of double jeopardy, but since no British trial has taken place, the British Home Secretary has granted the Enron Task Force’s request under the Extradition Act of 2003, which was passed to facilitate extradition of suspected terrorists to the U.S. Under that legislation, the Home Secretary can extradite British citizens without the U.S. authorities having to make a prima facie case — they need only set forth a statement of the facts that they hope to prove. Moreover, the Extradition Act is not recipricol — to extradite an American citizen from the U.S., the British still need to provide evidence that the American citizen has committed an extraditable offense.
Thus, if the bankers lose their appeal to the House of Lords and are extradited to Houston, they will be forced to prepare the defense of their case while imprisoned in Houston’s Federal Detention Facility. Meanwhile, their main accusers — Fastow and Kopper — remain living comfortably in River Oaks and Montrose.
Chalk it up as another example of the high price of asserting innocence.

Meanwhile, over in the natural gas markets . . .

o'reillyhand.jpgAs oil prices reversed a downward trend and rose over the weekend on the news of more Nigerian political problems (James Hamilton explains why this is important), the roller coaster of emotions that is the natural gas market continued unabated.
Just over two months after prices hit an all-time high amid fears of shortages this winter, the natural gas market is flush with a record amount of gas and, as a result, natural gas prices are in full retreat. A U.S. government report last week reflected that natural gas supplies in underground storage facilities are almost 45% above what is normal for this time of year and now speculation is increasing that a record amount of gas will be left over from winter as the weather warms in the midwest and northeast U.S. this spring. As a result, prices for natural gas settled last Friday at $7.182 a million British thermal units, which compares with the $15.378 per million British thermal units closing price on December 13th. The drop in prices is allowing industrial buyers of gas to enter the long side of the market and hedge their risk of higher prices in the future.
No word yet from Bill O’Reilly on how the big oil and gas companies allowed such a situation to occur.

Didn’t you have a feeling this was coming?

radio_shack_logo4.gifAfter a bad week, Ft. Worth-based RadioShack Corp. Chief Executive Dave Edmondson resigned yesterday by “mutual agreement” with the company’s board under which Edmundson will receive a severance package valued at about $1.5 million.
Public disclosure early last week of Edmundson’s resumÈ fluffing was bad enough, but the final straw in Edmundson’s fate was RadioShack’s announcement late last week that it is planning on closing as many as 700 stores and taking a large write-down. Although company revenue rose about 5% to $1.67 billion in the quarter ended Dec. 31, the company’s profit for the quarter dropped 62% to just under $50 million (or 36 cents a share) from about $130 million (81 cents a share) in the same quarter a year ago. Its shares lost over 8% of their value after the annoucement and hit a 52-week low of $18.80 in trading on the New York Stock Exchange during this past day.
Despite the distraction of Edmundson’s problems, his quick exit may actually help RadioShack. This is a company that is desperately in need of a new vision — or at least a plan — and it was clear that Edmundson no longer had the credibility with the board and employees to pull one together. It’s hard for a company to distinguish itself in the marketplace when all it seems to be doing is selling cellphones.
Meanwhile, the Wired GC points out that the Edmundson/Radio Shack affair actually reflects a simple lesson — effective leaders lead by example.